GST Implication on Goods sent for Exhibition

Understand the GST implications on goods sent for exhibition. Learn about the criteria for considering an activity as a supply, exceptions under Schedule 1, and the importance of consideration. Goods sent for exhibition, not covered by Schedule 1, are not initially considered a supply due to the lack of consideration. Explore scenarios where goods sent for exhibition may be treated as supply, issuance of tax invoices, and registration requirements. Discover the specific format for maintaining records and the role of delivery challans. Get insights into claiming input tax credit on exhibition expenses and the requirement of e-way bills for interstate exhibitions.

Exhibition of Goods: Exhibition of goods is simply DISPLAY of goods at a trade fair or any other occasion with the intention to promote business and enhance customer base and sales.

As per CGST Act, any business activity or transaction is considered as SUPPLY only if:

• It is made for some CONSIDERATION, and
• It is for the furtherance of business

Except in case of activities mentioned in schedule 1 of the act.

Activities which are specified under schedule 1:

• Permanent transfer of business asset where ITC has been availed on such assets
• Supply of goods or services between RELATED persons or between DISTINCT persons as specified in section 25 of CGST Act, when made in course or furtherance of business

Provided that gifts by an employer to employee up to Rs.50,000 shall NOT be treated as supply.

• Supply of goods:

a) by principal to agent where the agent undertakes to supply such goods on behalf of principal, or

b) by agent to principal where the agent undertakes to receive such goods on behalf of principal

• Import of SERVICES by a person from a RELATED person or from any of his other establishment OUTSIDE INDIA, in course or furtherance of business.

Hence, goods sent for exhibition, other than those mentioned in schedule 1, are NOT considered as supply, as initially there is no CONSIDERATION.

Also goods sent exhibition outside INDIA are NOT considered as “ZERO-RATED-SUPPLY” because a supply is considered as Zero rated supply only if:

• It involves export of goods or service or both, OR
• It is made to SPECIAL ECONOMIC ZONE.

But goods sent for exhibition are not even considered as supply of goods due to lack of consideration, then how it will even be categorised under zero rated supply.

But goods sent for exhibition may consider as supply in following cases:

• Case 1: Goods are sold either fully or partly, OR
• Case 2: Goods, other than the goods sold, are NOT brought back within a period of 6 months from the date of removal of goods for exhibition. It is considered as deemed supply.

In both the cases stated above, the person sending goods required to issue a TAX INVOICE:

• In case 1, on the date on which sale is made
• In case 2, on the date 6 months after the goods sent for the exhibition

Registration Requirement

• Participants of exhibition, who are registered under GST in the state of exhibition, may continue to use their existing GSTIN by adding the place of exhibition as place of business.
• Participants of exhibition, who are not registered under GST in the state of exhibition, may register themselves as Casual Taxable Person or obtain separate GSTIN in state of exhibition, in order to send goods for exhibition.

Format for Records

There is specific format under which records shall be maintained for the goods sent for the purpose of exhibition.

One such format can be as below

Delivery Challan

Since, goods sent for exhibition are considered as “sale on approval” basis, so they constitute sales only when it is approved by customer/. Thus, at the time of removal of goods for exhibition a “DELIVERY CHALLAN” is required to be sent along with the goods. Delivery challan is mandatory for the movement of goods for exhibition.

Three copies of delivery challan should be prepared:

• Original copy for Consignee
• Duplicate copy for transporter
• Triplicate copy for Consignor

Delivery challan shall contain following details:

• Delivery challan must be serially numbered not more than 16 characters
• Date as well as number of delivery charge
• Name, address and GSTIN of consignor, if registered
• Name, address and GSTIN of consignee, if registered
• HSN code and description of goods
• Taxable value
• Tax rate and amount of tax
• Place of supply, for inter-state movement

But when goods are sold or deemed to be sold then supplier needs to issue TAX INVOICE.

REFUND

When the goods sent for exhibition is sold or deemed to be sold then supplier of such goods is eligible to claim ITC in respect of such goods or Refund of ITC in case of ZERO RATED SUPPLY i.e. when goods are sent for exhibition to special economic zone or outside India.

Since at the time of sending goods for exhibition outside India, such goods were not categorised under zero rated supply, that means bond or letter of undertaking i.e. LUT were also not issued which is required for claiming refund of ITC. But it is clarified that, even if sender did not execute bond or LUT, he shall be eligible for refund in accordance with section 54(3) read along with rule 89(4) of CGST Rules.

FAQ’s

Q1: Can we claim input on GST paid on exhibition expenses such as expenses on stall, tables, chairs etc.?

A: Yes, they are considered as marketing expenses which is related to business. Hence, ITC can be claimed on such expense.

Q2: Is E-way bill required for sending goods for exhibition?

A: Yes, if such exhibition takes place out of state or out of country in which supplier is registered.

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The author can be however contacted for further clarification at 9654182791 or via mail at [email protected]

DISCLAIMER:- This Blog is for the purposes of information / knowledge and shall not be treated as solicitation in any manner or of for any other purposes whatsoever